Johnson, Partygate and manifesto commitments

Originally written as a column for Inside Housing.

It’s been just over two years but thanks to Covid-19 it feels like a lifetime ago.

Leaving aside the question of whether he has really delivered on his headline promise to ‘Get Brexit Done’ how much of Boris Johnson’s 2019 election manifesto has survived into the post-Coronavirus age?

The question was originally prompted by the outcome of the judicial review over Everyone In. The scheme launched at the start of the pandemic to get rough sleepers off the streets and into hotels within a few days was a great success.

It also signalled that the manifesto promise to ‘end the blight of rough sleeping by the end of the next parliament’ should be well within reach.

Except that, for all that rhetoric, Everyone In morphed from a policy into an initiative with an asterisk attached. From around May 2020, it was no longer a promise but branding for an initiative exhorting local authorities to act without giving them any extra resources.

And then I realised the wider context as we continue the seemingly interminable wait for Sue Gray’s report.

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The ‘problem of rent’ has just got worse

Originally written as a column for Inside Housing.

The UK has among the lowest levels of basic benefits in the developed world but spends more than any other country on housing benefits.

The two statements, which come from a new report by the Resolution Foundation, are of course connected and they are the result of deliberate policy choices over decades.

The first relates to the way that the benefits system evolved in the wake of the Beveridge report with low levels of working-age benefits supplemented by extra support for housing, children and ill-health.

Beveridge had confessed that he was unable to solve what he called ‘the problem of rent’ – how you account for housing costs that vary between different areas – in his blueprint for social security after the Second World War.

His fudged solution was to add a flat rate housing allowance to contributory unemployment benefit but that was rejected in favour of means testing in the scheme that was introduced. 

However, his whole report was written on the assumptions that full employment, mass council housebuilding and private sector rent control would continue.

By contrast, most European countries have more generous contributory and earnings-related benefits supplemented by a means-tested safety net.

This graph from the report shows the difference:

For clarity it’s worth pointing out that this is based on the OECD definition of housing benefits in kind, which includes payments for housing costs but not mortgage tax relief (still paid in some countries) or capital investment in social housing or the ‘subsidy’ of the lower rents it produces.

The second policy choice dates back to the deregulation of rents and decline of social housing in the 80s and 90s – reversing those assumptions made by Beveridge – and more recent falls in home ownership among low-income households that have left them paying higher rents.

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Gove’s grand plan leaves gaps to fill

As one MP put it, we welcome the steps forward in ministerial statements on building safety only to find problems in the steps backward that follow.

Michael Gove’s plans to ‘make developers pay’ represent the most positive steps seen so far but there are still major concerns over what comes next.

For starters, how exactly will he ‘make’ them? The initial plan in talks before Easter seems to be persuasion but the levelling up secretary has limited levers that he can pull and why would companies that have previously resisted calls to ‘do the right thing’ change their minds now?

He cited the way that Rydon Homes, sister company of the main contractor in the Grenfell refurbishment, was barred from Help to Buy but the scheme ends in 2023 and most of the £29 billion in equity loans has already been committed.

This highlights yet again a major flaw in the government’s support for housebuilders that I highlighted even before the creation of Help to Buy: its failure to get a quid pro quo for all that help for profits, bonuses and dividends.

Short of another support scheme, which may ironically be needed if supply plummets, that leaves blacklisting from Homes England programmes and naming and shaming as his principal weapons. Neither is a negligible threat but will they be enough?

That leaves coercion, legal action or the ‘high-level threat’ of a new tax that Gove is authorised to make in the letter leaked to Newsnight from chief secretary to the Treasury Simon Clarke.

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Crazy lending v insane housing system

Originally written as a column for Inside Housing.

It sounds crazy and it is. New mortgages at up to seven times a person’s income look like a reminder of the excessively loose lending seen before the financial crisis and the collapse of Northern Rock.

At the end of a year in which house prices have risen at their fastest rate since 2006 and interest rates began to rise from record lows, and at the start of one in which household incomes face a squeeze, the timing of the new deal from online broker Habito looks, shall we say, interesting.

Take that seven times income and add five times a partner’s salary and a couple each earning £25,000 could borrow £300,000 to buy a £330,000 home, well above the Nationwide’s new UK average of £255,000. Take out the loan for 40 years rather than the traditional 25 and they can reduce their monthly payments too.

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